Resource Rarity: The Public/ Private Universities Sustainable competitiveness Strategy

May 23, 2017 | Autor: American Journal | Categoría: Resource Based View
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American Based Research Journal

Vol-6-Issue-2 Feb-2017 ISSN (2304-7151)

Resource Rarity: The Public/ Private Universities Sustainable competitiveness Strategy Author Details: Lydia Jeptoo Maket Lecturer, Moi University - P.o Box 3900, Eldoret, Kenya Abstract This paper analyses the effect of resource rarity on sustainable competitiveness of universities. The analysis is embedded on the Resource Based View model (RBV and the balanced scorecard model of performance). According to RBV of strategic Management, competitive advantage is closely related to companies’ internal characteristics (value, rarity, inimitability and non-substitutability). The constructs of sustainable competitiveness were derived from the balanced scorecard (Financial; Teaching/Learning; Service/outreach; Scholarship/ Research and Workplace satisfaction). Although RBV is considered one of the most influential theories of strategic management, this paper unveils the empirical evidence of resource rarity on sustainable competitiveness in the service industry (universities). A sample of 262 was selected from 2 universities in Kenya (one private and one public). Using the regression analysis, findings revealed that the public university was superior in resource rarity than the private university and also that resource rarity contributes to sustainable competitiveness in universities. Key Words: Resource Based View, Resource value; Rarity, Inimitability, Non-substitutability and The balanced scoreard INTRODUCTION The means by which some businesses achieve and sustain a competitive advantage over other firms is the central research focus of strategic management (McGee et al, 2005). During the late 1970s and the 1980s, the strategy literature emphasized the external environment of the firm. The focus was on the analysis of the industry attractiveness and the competition. The work of Harvard economist Michael Porter was very influential (Hafstrand, 2002). Strategic analysis and choice continue to form the phase of the strategic management process in which business managers examine and choose a business strategy that allows their business to maintain or create sustainable competitive advantage. Their starting point is to evaluate and determine which competitive advantage provide the basis for distinguishing the firm in the customers‟ mind from other reasonable alternatives (Pearce and Robinson, 2007) In the late 1980s and early 1990s, the focus increasingly shifted towards the internal aspects of the firm (Hafstrand, 2002). Research has begun to recognize the use of resource –based capabilities in gaining and maintaining competitive advantage (chandler & Hanks, 1994; Long and Vickers-Koch, 1995; McGee & Finney, 1997). Tracing its roots from the traditional strategic management concept of distinctive competence e.g. (Selznik, 1957; Andrews, 1971), the resource-based view argues that competitive advantage results from firms a firms‟ resources and its capabilities. Resources include capital equipment, workers and management skills, reputation and brand names (Barney, 1991). Resources are the source of a firm‟s capabilities; and capabilities refer to a firm‟s ability to bring together and deploy them advantageously (Day, 1994). While resources are relatively tangible, capabilities are less readily assigned a monetary value, and are often deeply embedded in organizational routines and practices, thereby making them less subject to imitation by present or potential competitors (Dierkx & Cool, 1989). Distinctive competencies (Selznik, 1957; lado, et al, 1992) refer to the unique skills and activities that a firm can do better than its competitors. When competition intensifies, the possession of these competencies should become increasingly important for the firm‟s continued success. These are the distinctive capabilities that support a market position that is valuable and difficult to imitate. http://www.abrj.org

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American Based Research Journal

Vol-6-Issue-2 Feb-2017 ISSN (2304-7151)

Institutions of higher education are also in competition and (Clarke, 1997) argues that if they are to compete more aggressively, they need to determine the areas of comparative competence on which to base successful resource-led strategies. In Kenya (Materu, 2007) Higher Education Institutions (HEIs) become more competitive as a result of increasing private sector participation, growing demand for accountability, limited public funding and the advent of borderless HEIs. Added to this is the growing trend in international ranking of universities. Hypotheses Ho1 There is no difference in resource rarity between private and public universities H02 Resource rarity has no effect on sustainable competitiveness of universities THEORETICAL BACKGROUND The resource-Based View Model The resource-based view (RBV), as one of the most widely accepted theories of competitive advantage, focuses on relationships between company‟s internal resource characteristics and competitive advantage (Spanos and Lioukas, 2001). It is based on the assumption that companies within an industry are heterogeneous in terms of resources they control. Since resources may not be perfectly mobile, heterogeneity can be long lasting (Barney, 1991). According to Barney (1992, 1995) resources and capabilities include financial, physical, human and organizational assets that a company uses to develop, manufacture and deliver products and services to customers. Financial resources include debt, equity, retained earnings, etc. Physical resources include machines, manufacturing plants and buildings. Human resources relate to the skills, knowledge, ability to make judgments, risk-taking propensity and wisdom of individuals associated with the company. Organizational resources are history, connections, confidence, organizational structure, formal reporting structure, management control systems and compensation policies (Barney, 1992, 1995). Resources are inputs into a firm‟s production process (Barney 1991) that are either knowledge-based or property-based (Miller and Shamsie 1996). Amit & Schoemaker (1993) divide the construct “resource” into resources and capabilities. In this respect, resources are tradable and non-specific to the firm, while capabilities are firm-specific and are used to engage the resources within the firm, such as implicit processes to transfer knowledge within the firm (Makadok, 2001; Hoopes et al, 2003). Makadok (2001) emphasizes the distinction between capabilities and resources by defining capabilities as “a special type of resource, specifically an organizationally embedded non-transferable firm-specific resource whose purpose is to improve the productivity of the other resources possessed by the firm”. “Resources are stocks of available factors that are owned or controlled by the organization, and capabilities are an organization‟s capacity to deploy resources”(Amit & Schoemaker, 1993). Essentially, it is the bundling of the resources that builds capabilities (Sirmon et al, 2007) Property-based resources typically refer to tangible input resources, whereas knowledge-based resources are the ways in which firms combine and transform these tangible inputs (Galunic and Rodan 1998). Knowledge-based resources may be particularly important for providing sustainable competitive advantage, because they are inherently difficult to imitate, thus facilitating sustainable differentiation (McEvily and Chakravarthy 2002). They also play an essential role in the firm‟s ability to be entrepreneurial (Galunic and Eisenhardt 1994) and to improve performance (McGrath et al, 1996). From the standpoint of resource acquisition, the initial resources involve different dimensions including capital (Bygrave 1992), human resources (Cooper 1981; Dollinger 1995), and physical resources (Dollinger 1995). While the resource based view within the field of Strategic Management was named by Birger Wernerfelt in his article A Resource-Based View of the Firm (1984), the origins of the resource-based view can be traced back to http://www.abrj.org

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American Based Research Journal

Vol-6-Issue-2 Feb-2017 ISSN (2304-7151)

earlier research. Retrospectively, elements can be found in works by Coase (1937), Selznick (1957), Penrose (1959), Stigler (1961), Chandler (1962) where emphasis is put on the importance of resources and its implications for firm performance (Rumelt, 1984; Conner, 1991; Mahoney and Pandian, 1992; Rugman and Verbeke, 2002). This paradigm shift from the narrow neoclassical focus to a broader rationale, and the coming closer of different academic fields (industrial organization economics and organizational economics being most prominent) was a particular important contribution (Conner, 1991; Mahoney and Pandian, 1992). The Resource based view explains that a firm‟s sustainable competitive advantage is reached by virtue of unique resources being rare, valuable, inimitable, non-tradable, and non-substitutable, as well as firm-specific (Makadok 2001; Finney et al, 2004). These authors write about the fact that a firm may reach a sustainable competitive advantage through unique resources which it holds, and these resources cannot be easily bought, transferred, or copied, and simultaneously, they add value to a firm while being rare. It also highlights the fact that not all resources of a firm may contribute to a firm‟s sustainable competitive advantage. Varying performance between firms is a result of heterogeneity of assets ( Helfat and Peteraf, 2003) and RBV is focused on the factors that cause these differences to prevail. Although the RBV is considered one of the most influential theories of strategic management (Powell, 2001; Priem and Butler, 2001; Newbert, 2008), its acceptance seems to be based more on the basis of logic and intuition than on the empirical evidence (Newbert, 2008). In most studies that examine the connection between company‟s resources and performance, resource heterogeneity approach is employed. By that approach, specific resource or capability is claimed to be valuable, rare, imperfectly imitable or non-substitutable, and then the amount of that resource or capability that a company owns is correlated with competitive advantage or performance (Newbert, 2007, 2008). This type of research provides evidence that a specific resource can help company to achieve competitive advantage, but does not verify the influence of resource characteristics (value, rareness, inimitability and non-substitutability) on competitive advantage (Newbert, 2008). Results of studies using the resource heterogeneity approach suggest that company‟s asset influences market performance, but not profitability (Spanos and Lioukas, 2001), company-specific resources (corporate management capabilities, employee value-added and technological competence) enhance accounting-based and market-based measures of performance (Acquaah and Chi, 2007) and that relationships between resource sustainability, capability dynamism and resource orientation (RO) are significant (Chmielewski and Paladino, 2007). Wu (2010) divided resources in two groups, VRIN and non- VRIN, and concluded that groups are positively correlated to competitive advantage in low and medium volatility environments, but in high volatility environments, only VRIN resources have influence on competitive advantage. The Balanced Scorecard for Higher education The fundamental mission of research universities and their academic units and programs is the advancement of excellence in the creation, sharing and application of knowledge, typically described in terms of teaching, scholarships/ research and public service/ outreach (Ruben, 1999). Fulfilling this mission requires a distinguished faculty, high level research activities, innovative and engaging teaching-learning processes, supporting technology and quality facilities, capable students, competent faculty and staff and legislative and public support. Ruben (1999) indicates that although historically less well appreciated, universities also requires excellence in communication and a service oriented culture, appropriate visibility and prominence within the state and beyond; and a welcoming physical environment; a friendly, supportive and respectful social environment; expectations of success; responsive, integrated, accessible and effective systems and services; and a sense of community. Most specifically, fulfillment of this mission requires successful engagement with a number of constituency groups, and for each desired and potentially measureable outcomes can be identified: prospective students who http://www.abrj.org

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American Based Research Journal

Vol-6-Issue-2 Feb-2017 ISSN (2304-7151)

are applying to a university/program as a preferred choice, informed about the qualities and benefits they can realize through attending; current students who are attending their university/program of choice with well defined expectation and high levels of satisfaction relative to all facets of their experience, feeling they are valued members of their university community with the potential and support to succeed. The research contract agencies and other organizations or individuals seeking new knowledge or the solutions to problems are another constituency whose desired outcome is to actively seek out the university and its scholars for assistance. Friends - who are proud to have a family member attending the university/program, supportive of the institution, recommending it to friends‟ and acquaintances; Alumni- who are actively supporting the university/program and its initiatives; Employers- seeking out university/program graduates as employees, promoting the university/program among their employees for continuing education; Colleagues at other institutions- viewing the university/unit as a source of intellectual and professional leadership and a desirable workplace; Governing boards- supportive of the institution and enthusiastic about the opportunity to contribute personally and professionally to its advancement; local community-viewing the institution as an asset to the community, actively supporting its development (Ruben, 199). Another constituency includes the friends, interested individuals, donors, legislators and the general publictheir desired outcome is valuing the university as an essential resource, supporting efforts to further advance excellence; faculty-pleased to serve on the faculty of a leading, well-supported institution/program, enjoying respect locally, nationally and internationally and lastly staff-regarding the institution/unit as a preferred workplace where innovation, continuing improvement and teamwork are valued, recommending the institution/unit to others (Ruben, 1991). METHODS Setting This analysis targeted the staff of both private and public universities. It focused on the staff in the schools/faculties that are in both the universities. These included: Arts and Social Sciences; Law; Education and Commerce/Business Management. The total number of staff at the private university in the four faculties/schools is 170 while those from the public University are 250. The staffs targeted were administrators, and all the teaching staff of the four schools. The four schools targeted were stratified into departments. The school of Arts and Social Sciences for example was made up eight departments at public University and also eight departments at private university; school of Law had 4 departments at the public University and 2 at the private university; school of Education had 4 departments at the public university and 2 at the private university and school of Business Management has the 5 departments at the public University and also 3 at private university. This study used Kerjcie and Morgan (1970) method for determining the sample that is representative of the population using the following formula: S = X2 NP (1− P) ÷ d2 (N −1) + X2P(1− P) Where: S = required sample size. X2 = the table value of chi-square for 1 degree of freedom at the desired confidence level (3.841). N = the population size. P = the population proportion (assumed to be .50 since this would provide the maximum sample size). d = the degree of accuracy expressed as a proportion (0.05).

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American Based Research Journal

Vol-6-Issue-2 Feb-2017 ISSN (2304-7151)

A standardized table has been attached as an appendix. From the sample size table, the public university staff population of 250 in the four schools will be represented by a sample size of 148 and the private university population of 170 will be represented by sample size of 114. Data Collection The data collection instruments used in the analysis was questionnaires. The questionnaires were administered to the staff members of the four schools (Arts and Social Sciences; Law; Education and Commerce/Business Management in both universities. Questionnaires were preferred because of the large number of the sample size which means therefore that holding interviews would take very long. A questionnaire was appropriate for this study because it gives the researcher an opportunity to carry out an inquiry on specific issues on a large sample and thus make the study finding more dependable and reliable ( Kothari, 2003). The instrument was also appropriate because the respondents are literate and therefore can respond to the questionnaire on their own. The questionnaires were self-administered; where the respondents were asked to complete the questionnaires themselves. Measurement Scales Two main variables were used in this study; resource characteristics as the independent variables and sustainable competitiveness as the dependent variables. Control variables included Cost of the institution, location and age. Sustainable Competitiveness Sustainable competitiveness was measured using five constructs. They include programs/courses, public service/ outreach, research, workplace satisfaction and finance (Ruben,1999). The researcher measured the strength of the respondents‟ agreement on 10 statements developed by the researcher. Two items were used to measure each of the five constructs of sustainable competitiveness. Programs or Courses for example was measured using: “all the lecturers in the department have masters degrees and above” and “programs offered in the department are current in the market”. Research was measured by “the department has a journal that is produced on quarterly basis” and “publications are recognized if they are published in selected stature of journals of publishers”. The two items that measured Outreach were “Employers send their employees to the departments‟ programs for continuing education” and “the alumni of the department offer both financial and moral support to its initiatives”. Workplace Satisfaction was measured by “the department experiences very low staff turnover” and “employees in the department are regularly trained in their area of specialization” and lastly Finance was measured with “the department receives donations (monetary, books etc)” and “departments prepares an operating budget annually” Resource Characteristics Resource characteristics were measured using four constructs: value, rarity, inimitability and nonsubstitutability (Talaja, 2012). Value of resources was measured using 13 items such as “the department has built a good image over the years”; “the programs offered at the department are very attractive”. Rarity of resources was measured with 8 items e.g. “the departmental library has very unique books for the different programs”; “the department has some very unique programs it offers”. Inimitability of resources was measured using 11 items e.g. “interpersonal and intrapersonal relationships in the department cannot be copied”; “the trust that exists within the employees and the management of the department cannot be emulated” and finally, nonsubstitutability of resources was measured using 2 items: “programs developed in the department cannot be replaced by other programs from other institutions” and “the lecturers‟ competencies cannot be replaced by others and the same output expected”. Data Analysis http://www.abrj.org

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American Based Research Journal

Vol-6-Issue-2 Feb-2017 ISSN (2304-7151)

A total of 290 questionnaires were distributed; 170 to the public University and 120 to the private. These numbers are more than the sample sizes of 148 and 114 for public and private universities respectively. This is because the some respondents misplaced their questionnaires, requiring the researcher to redistribute them again. The overall response rate was 91.7% (156) for the public University and 97.5% (117) response rate for the Private University. A total of eight questionnaires were discarded from the public University because they were blank & incomplete, similarly, two were discarded from the private university for being incomplete. The total usable questionnaires were 262, that is 148 (87.1%) from the public University and 114 (95%) from the private university which is acceptable for this type of research (Drnevich and Kriauciunas, 2011; Protogeron et al, 2008). A total of seven items were proposed to measure rarity of resource. Using PCA, all the seven items were extracted. The seven factors were segregated into two factors which accounted for 76.920% of the variance in rarity of resources. The Kaiser–Meyer–Olkin value was 0.730 and the Bartlett‟s test of sphericity value of 1347.391 was significant (p
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